Frustration over corporation tax delay

Mark Nodder was one of the business leaders disappointed that the decision on corporation tax has been put off for several months.

Business groups have expressed frustration that a decision on the devolution of corporation tax has been put off until September, and urged officials to push for a positive resolution.

Ministers from the UK Government and the Northern Ireland Executive held the third meeting of the Ministerial Working Group in Belfast on Monday, after which it had been hoped that a clear signal would emerge.

But the group announced that further work would be necessary before a decision on the devolution of corporation tax powers to the Executive can be reached, and another meeting has been scheduled for September.

Speaking at an event this morning, the new President of the Northern Ireland Chamber of Commerce Mark Nodder expressed his frustration that no agreement had been reached, saying the alignment of corporation tax is essential for business

“Officials must resolve outstanding issues with the aim of creating a position where a decision can be made in early September by the coalition Government. Our campaign for a reduction in corporation tax to stimulate greater investment by established companies and potential inward investors must continue to be a priority and kept on the political agenda until that decision is made,” he said.

Chairman of the Institute of Directors in Northern Ireland Mervyn McCall also said that the corporation tax issue remains a barrier to business growth.

“The apparent stalemate at the recent meeting of the Treasury, Executive and NIO into the reduction of corporation tax here is concerning. We had expected a decision this summer but this now looks unlikely and we will be seeking assurances that this important issue isn’t delayed further,” he said.

CBI Northern Ireland Chairman, Ian Coulter, said that while progress is being made in the discussions, the business community is frustrated that a decision on devolving corporation tax is still some months away.

“The process has been going on for almost a year, the key issues have been identified for several months, so yesterday’s outcome is very disappointing,” he said.

“It is essential that officials focus their efforts on resolving outstanding issues with the aim of creating a position where a decision can be made in early September by the Coalition Government.”

There remain a number of hurdles to overcome before the green light is given to begin the process of devolving corporation tax to the Executive.

Chief among them is agreeing the amount which would be taken off the block grant received by Northern Ireland from Westminster in order to balance the lower tax take – a requirement under EU law.

While previous estimates were that Northern Ireland is likely to see a reduction of around £300m a year, it is believed Treasury are now putting the figure at more than £500m, in part due to the high technical and IT costs.

Following the meeting on Monday, Secretary of State Owen Paterson said: “We’ve made substantial progress, particularly on setting out the potential shape of a devolved corporation tax regime without disproportionate burdens on either businesses or HM Revenue and Customs. But there remain big questions around the potential costs to the block grant. These must be resolved before a final decision can be made.”

The government’s Exchequer Secretary David Gauke also said that while the parties were agreed on some aspects of the work, there remain some crucial areas where “significant differences of opinion still exist”.

“I recognise that many people are keen to see a decision on the devolution of Corporation Tax in Northern Ireland, but it is important that any decision is informed by a full understanding of the implications of such a step,” he added.